My Debt Diary

I Have Completed My Emergency Fund!

Today’s post is a short one, but it is very very exciting for me. I can finally say that after just over a month of saving I have completed my Emergency Fund! It is so nice to be able to confirm that I have now finished Baby Step 1 and I am ready to get on with Baby Step 2, full speed ahead. If you are wondering what an emergency fund is, you can read about them here.

As I discussed in this post, I have decided to save a £500 emergency fund. This suits my current level of income and outgoings. If my income increases I will save more. Many people choose to save £1000 as is recommended by Dave Ramsey in the Total Money Makeover. As with every personal journey, you have to do what suits you.

Now I’m moving into the debt snowball stage. Full focus is on paying off each of my debts, from smallest to largest. If you read my goals for August 2018 you will know that my Halifax Credit Card is first. The total balance is currently at £390 and so if I can pull in enough work over the next week or so it will be gone by the end of the month. That would be an incredible start to Baby Step 2 for me!

As always, I will keep you posted with my progress. Now I’m off to celebrate my first victory in my debt free journey.

Yaaaaaaaaaaay!

I have completed my emergency fund - pinterest

 

Emergency Fund Saving | My Progress

I’m currently in the process of building a pot of money which I call my Emergency Fund. Not sure what that means? I have a post here that will explain all! Charlotte from charlottemusha.couk has also written this great post that explains the emergency fund really well.

Today I wanted to share my emergency fund saving progress with you. These are the things that have worked for me personally over the last month or so.

Emergency Fund Saving Method

In this post from last week I discussed using survey sites and selling on eBay to make money. Even making small amounts from these can add up very quickly. As work has been so quiet recently these have actually been my main methods for building my emergency fund.

A wardrobe clear out was my golden ticket when it came to eBay. I made sure to be thorough and take out anything I hadn’t worn in a while, including a number of items that still had tags on! I’ve been photographing the items a couple at a time and listing them when I’m watching telly in the evening. I have been averaging around £38 each week in sales. Selling your unwanted items is a great way to find that extra bit of money.

Survey sites are something that I have mentioned over and over again, but I will bring them up once more as I think they’re great. Everyone has their own preferences. I personally love Prolific Academic. The surveys pay well and you never get thrown out. If you click here you can use my referral link.

Another favourite money saving method of mine is skimming. Put simply, it’s the process of checking your bank account each day and moving the extra pennies or pounds over to savings. Say I have £117.39 in my account, I might move 39p over to my savings and leave £117 in my current account. If things are going well with my income I might choose to move £2.39, leaving £115 in my current account. Either way, the money can really add up!

My Emergency Fund

My emergency fund target is £500. This is a comfortable amount for me to save at my current income level. It is also an ideal amount for me as it is just over the total of my bills and debt payments for one month. This means that if I have another particularly quiet period with work I know I will be covered.

My emergency fund total is currently £257.59. I’m just over half way to my goal! This has taken me roughly three weeks to pull together so far. I’ll be sure to share another update once I have completed it.

I hope you have found this short post useful and you are able to use them to get started on saving your own emergency fund if you don’t already have one. As I discussed in my previous post, I truly believe that everyone should have a safety net like this in their bank. We just don’t know what life is going to throw at us!

Laura from the Thrifty Londoner has written a great post on 20 Ways to Make Money with a variety of great ideas!

 

emergency fund saving method - pinterest

What is an Emergency Fund?

At the beginning of the month I set my goals for July 2018. One of the major targets I included was to set up my emergency fund. Those of you who have been a part of the #debtfreecommunity for a while will know exactly what I’m talking about. But for those who are new to the concept, what is an emergency fund?

What is an Emergency Fund?

Quite simply put, an emergency fund is a cash buffer. A pot of money that you set aside for a rainy day.

Whilst on your debt free mission, it’s natural to want to throw every single penny you have at your debt payments. You want the total to go down as quickly as possible! One hurdle we all face at some point however, is the appearance of unexpected payments. Unfortunately life waits for no one and no matter how careful we all are things pop up that we don’t plan for.

Before you get on your way with debt payment it is important to take some time to set aside some money for this very occasion. Dave Ramsay, author of The Total Money Makeover recommends that you save £1000, or £500 if you are on an incredibly tight budget or low income. (His book is an incredible financial guide and one that I will talk about in more depth at a later date.)

Whilst in the process of saving your emergency fund it is important that you still make all of your minimum payments to credit cards, loans and other forms of debt that you have. The sooner your fund is in place, the sooner you can give your debt your full focus. Once you’ve completed your emergency fund you can progress with debt payments knowing your safety net is in place.

What should I use it for?

That horrible morning when the boiler breaks down on the coldest day of winter. The dread of hearing your car give up on the way to work. An unexpected loss of income when have urgent payments to make. All of these fill me with panic when I look at an empty bank account and know anything could happen that I haven’t prepared for.

This is what an emergency fund is for. You will feel a huge sense of relief knowing that you have a pot of cash which is easy to access and can dig you out of that horrible situation immediately.

What should I NOT use it for?

Your emergency fund is NOT there for days when you’re a bit tight for cash. It should not be the go to when you have the January blues and fancy an “emergency” holiday and it is absolutely not to be dipped into for that quick coffee because “it’s fine, you’ll just pop the money back in when you get paid”.

This can be really hard to deal with in moments of weakness when your mates are off out for dinner and you hate missing out but it is so important to stick to your budget and keep your emergency fund for emergencies only. It will be tough but you will be so unbelievably grateful for the pot of money that saves you on a day when you really do need it.

Where should I keep it?

Your emergency fund should be liquid. In other words, it should be in a savings account or current account that is separate from your day to day spending money but still easy for you to access. There should be no penalties for withdrawals. It should be accessible immediately in case of, you’ve guessed it, an emergency.

What do I do if I have to use it?

Top it back up again. It is as simple as that. Once the emergency is dealt with, your emergency fund might be a few pounds down or it might be completely empty. Pause your debt payment and go back to minimum amounts temporarily. Then top your emergency fund back up to the £500 or £1000 that you originally had. Knowing how much it has saved you in an emergency will make it all the easier to fill up second time round!

Charlotte Musha has written a great in depth post about the emergency fund, baby step one, from Dave Ramsey’s perspective in this post. 

what is an emergency fund - pinterest

This post may contain affiliate links.

My Goals for July 2018

My first goal setting post!!

This is the bit I get excited about. I LOVE setting goals and making plans and writing lists. It always gets me motivated to get a move on and take action. What I would say though, is that I do often find myself losing motivation and chopping and changing my goals quite often too and so this is something I need to bare in mind and try and try and tackle. Here are my goals for July 2018.

My goals for July 2018:

  • Save £500 for my emergency fund. Anyone who has been in the #debtfreecommunity for more than five minutes will understand the importance of having an emergency fund. Add to this the unpredictability of being self-employed and this is a vital first stepping stone for me!
  • Put £1000 into debt payments. I want to make a good start on my debt payment this month. Once the emergency fund is in place, the first £1000 is going straight to debt!
  • Find one new income method. As you will have seen if you read my Starting Point post here you will know that I currently only make money from my freelance work and through Prolific Academic. I want to diversify my income so this is an important one this month!
  • Take time to nurture my mental health. The main focus of this whole journey for me is of course money and debt payment. What I have recognised however is that I need to pay attention to my mental health if I want to remain motivated and productive. I’m not sure what I will be doing yet and how I will be looking after myself, but it’s something I want to spend some time on. This is definitely a topic I want to explore in more detail in a future post.

So there they are, my goals for July 2018. I’ve kept it simple with just four. I think the fewer I set, the more focus I can give to each and the greater chance I have of achieving them all!

My Goals for July 2018

You can find my lifestyle blog Sunshine and Rain here, where I chat about my more day to day, non-financial goals.

This post may contain affiliate links.